My View: 13th payment from IMRF not a 'bonus'

Friday

Feb 21, 2014 at 2:00 PM

Your headline for the Associated Press story (Feb. 5), "Pension 'bonuses' costing Illinois taxpayers millions," describes a retirement benefit paid by IMRF as a "bonus." The story also implies this "bonus" money is squandered and paid to former government employees when it can be used for other purposes. Untrue on both counts.

Employees of local units of government provide you with various services and, in return, receive a salary, retirement program and, frequently, health insurance. It is a total compensation package not unlike what is found in the private sector.

IMRF provides a program that furnishes disability, retirement and death benefits. Part of this retirement package includes post-retirement benefit increases to protect against the ruinous effects of inflation on retiree income.

The recent media coverage sliced and diced that benefit and focused on one aspect of the package. The 13th Payment was enacted in 1992 and negotiated by employee and employer groups to protect against the ravages of inflation. The money distributed varies with the payroll of IMRF employers - going both up and down. It was enacted in a year in which Social Security recipients received a 3.7 percent increase (bonus?). It also came on the heels of a 10-year period during which Social Security recipients received an average annual compounded four percent increase (bonus?).

The Associated Press story implies that the monies used were diverted from more important services the unit of government could provide. Units of government participating in IMRF can levy real-estate taxes to fund retirement benefits for their employees. It is a restricted levy in that the dollars levied to fund retirement benefits can only be used for retirement benefits. A unit of government may not shift the money from one pocket to another and then pay that money for other services. Old fashioned? Yes, but rational and tidy from many perspectives.

So, when is a bonus not a bonus? When it is used to fight inflation as part of a comprehensive compensation package.

And remember, IMRF benefit payments are returned by retirees to their communities. A study conducted in 2012 showed that IMRF benefit payments generated $1.7 billion in economic activity statewide and helped support 12,344 jobs. Last year, IMRF paid $39.6 million to 3,287 benefit recipients in Winnebago County alone.